Regal Petroleum's explosive rise

MY regular technical scouring of the financial markets has led me farther a field than usual. Regal Petroleum has risen by over 400% in the last six months and perhaps not a share for the faint-hearted. However, technical analysis reveals that a new upsurge is now underway.

As with any mining or exploration stock, the slightest sniff of news leads to huge swings in price. And for some traders, share price volatility gives them the adrenaline fix they crave. And if that‘s the case, Regal Petroleum always delivers.

Turn back the clock to the beginning of this year and Regal was trading at just over 100p. Then came the big news of an oil strike in a Greek well.

This sent shares on a rocket propelled rally, trading up to 330p just six weeks later. Lots of investors took profits but almost as many held out for more. It was at this point that shares gained technical strength from a solid up-trend.

With this support, shares traded as high as 415p in May, before falling back to 340p. A new formation emerged - a technical triangle. This is a 'break-out' pattern with support from the up-trend and resistance from an opposing down trend.

Shares moved further into the pattern until just three days ago. Trading up from 390p to 400p, Regal caught my attention. Penetrating the upper resistance level, shares have now broken-out of the triangle pattern, forecasting that more gains are to come.

So where next for this volatile share? On the upside, technical targets point to 470p. But take caution, for as I said at the beginning, mining and exploration stocks are not for the faint hearted. A whisper of bad news will send shares back to the up-trend line, currently intersecting at 355p.

Stockwatch is written by William Akerman of Quantigma. For more views on techical analysis, go to www.quantigma.com